Record
keeping
"Record keeping" includes (1) noting dates and items and (2)
keeping any receipts.
Many
deductions are lost each year simply because people don't keep
good records. Keeping track of things like your business travel
expenses helps you remember to deduct them and also provides
verification if you're audited.
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Reduced
withholding
If
you get a large refund each year, you are having too much money
withheld from your paycheck. Money withheld by the IRS earns
no interest for you. Wouldn't you rather have that extra money
to earn interest for you each year? While there are significant
penalties for not withholding enough to pay your taxes, there
is no reason why you should give the government too much and
not get any interest on it.
One
warning. Some people get into trouble by under-withholding and
then not having enough to pay their taxes. What you want is
neither to under- nor over- withhold. If done right, you will
come out with almost no refund each year.
There's
an easy way to do this if your income this year will be about
the same as last year's. Simply use last year's total tax on
your return as a guide and reduce your withholding to come out
to slightly more than last year's total tax.
Charity
expenses
Most
people know that donations to charity are deductible, but you
may also deduct expenses you incur when working for a charity.
Generally,
unreimbursed expenses incurred on behalf of a charity are deductible.
These include automobile expenses (the standard mileage rate
is14 cents per mile), parking, tolls, telephone calls, and other
out-of-pocket expenses directly connected with and solely attributable
to the performance of services for a qualified charitable organization.
Travel
expenses are deductible only if they include "no significant
element of personal pleasure, recreation, or vacation in such
travel" (quoted from the Internal Revenue Code). This generally
means that the person who travels must spend all working days
on the charitable business. Examples could be attending a convention
that runs from 9-5 every day or actively supervising a scout
trip. Since this is a gray area, you might want to check with
a tax expert before assuming that the expenses are deductible.
